Aug 27, 2012

Last week, POGO blogged
about a Department of Veterans Affairs Inspector General (IG) report finding
that a service-disabled veteran-owned small business (SDVOSB) named Enterprise
Technology Solutions (ETS) had used its special status to allow the Fortune
500-sized health insurance provider Health Net to improperly benefit from a
federal contracting program for small and/or disadvantaged businesses. Despite catching
both companies red-handed, however, the IG only referred ETS for possible
suspension or debarment.

Health Net currently has 22 instances of misconduct in our Federal
Contractor Misconduct Database, including a temporary suspension from the Medicare program in 2010 and hundreds of
millions of dollars in fines, penalties, and settlements paid to private
plaintiffs and state regulators since 1995. However…

Health Net is a very big company. It currently ranks number 221
in the Fortune
500, with $11.9 billion in revenue and 7,400 employees.

More importantly, Health Net is also a very big federal
contractor, receiving billions
of dollars in contracts every year. Almost all of those dollars come from the
Pentagon to administer part of the TRICARE
health insurance program for millions of active-duty and retired military
personnel and their families.

Relations between Health Net and the government are very cozy.
Health Net has spent millions of dollars on federal lobbying
and campaign
contributions. Recall that ETS, the company that allowed Health Net to benefit
from the SDVOSB program, was formed in 2006 – with Health Net’s encouragement –
by a former senior VA official named Donald Neilson.
(According to Nextgov,
Neilson served as director of VA Information Management Services.) The Veterans
Affairs IG has released three reports in recent years identifying contracting
improprieties involving former VA employees who went on to form or work for
SDVOSBs.

POGO found
other instances of government officials walking through the revolving door into
Health Net. Thomas
Carrato, president of Health Net Federal Services (the division of Health
Net that administers TRICARE), previously served as Executive Director of TRICARE Management Activity. In 2006,
Health Net Federal Services formed a TRICARE Advisory Committee composed
of retired senior Defense Department officials and top brass, including Principal
Under Secretary of Defense for Personnel and Readiness Charles
L. Cragin. According to a press
release, “members of the Advisory Committee will meet quarterly near the nation’s
capitol [sic] to provide [Health Net Federal Services] with strategic guidance.”

A big company with lots of cash to spend on political
influence, a loyal customer in the Pentagon, and a constantly spinning
revolving door add up to the Veterans Affairs IG’s disparate treatment of
Health Net and ETS. It’s part of a larger pattern we’ve seen in recent years
with Boeing
and its non-suspension suspension; the brief time-outs for IBM,
L-3
Communications, Booz
Allen Hamilton, and GTSI;
and the hands-off approach taken with regard to BAE
Systems, BP, KBR, and now Health Net.

Neil Gordon is an investigator for the Project On Government Oversight.

Comments

Neil please contact me I have information. That finally. May be able to hold. healthnet federal services, healthnet insurance the joint commission and. urac accountable. When the contract was severed the. Vista system national data base did not which in turn where normally. Healthnet federal services would be. Able to maintain this information. If they. Hadn't lost this contract. Now tens of thousands veterans' protected health information is being transferred to a healthnet federal services which violates several privacy rules. The joint commission explained. The veterans had notify the joint commission individually. They veterans can only do so if they all know.
Sorry about the way this is written... I'm on a smartphone.
Thank you

I'm hoping that the OIG's referrals include DOJ and that the VA's Suspension and Debarment Committee is looking at all of the players involved. We have been in touch with the Hill and hope to see legislation or a hearing on the issue, especially VA and SBA's failure to hold agencies, companies, and individuals accountable.

If the IG report is correct, why is Mr. Neilson not being prosecuted for fraud? Did the IG determine that he did not know that what he was doing? Was he breaking the law? He made millions that could have helped thousands of Vets if the IG report is correct. Is Congress looking into this?